Optimal Pricing and Retailing Strategy for an Assembled Product Manufacturing–Remanufacturing Process under Carbon Emission Regulations and Autonomation

Bikash Koli Dey, Hyesung Seok and Kwanghun Chung ()
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Bikash Koli Dey: Department of Industrial & Data Engineering, Hongik University, Wausan-ro 94, Mapo-Gu, Seoul 04066, Republic of Korea
Hyesung Seok: Department of Industrial & Data Engineering, Hongik University, Wausan-ro 94, Mapo-Gu, Seoul 04066, Republic of Korea
Kwanghun Chung: College of Business Administration, Hongik University, Wausan-ro 94, Mapo-Gu, Seoul 04066, Republic of Korea

Sustainability, 2024, vol. 16, issue 14, 1-27

Abstract: Online-to-offline (O2O) retailing offers unique opportunities for customizable assembled products with spare parts. Customers can browse and configure their desired product online, selecting from various components. Imperfect production, where a certain percentage of products have defects, can be amplified in the manufacturing system. Stricter carbon emission regulations put pressure on manufacturers to minimize waste. This creates a tension between discarding imperfect products, generating emissions, and potentially offering them at a discount through the O2O channel, which could raise quality concerns for consumers. In this study, an imperfect single-stage production process is examined, incorporating manufacturing–remanufacturing within a single stage for assembled products containing various spare parts. The study explores an investment scenario aimed at enhancing the environmental sustainability of the product. Additionally, two carbon emissions regulation strategies, specifically carbon cap-and-trade regulation and carbon taxation, are evaluated for their effectiveness in mitigating carbon footprints. The identification of waste, particularly in the form of defective items, is achieved through automated inspection techniques. The demand for spare parts associated with the assembled products is intricately linked to the selling prices set across diverse channels. Finally, the total profit of the manufacturing system is maximized with the optimized value of the selling prices, order quantity, backorder quantity, and investments in autonomated inspection, setup cost, and green technology. Numerical illustrations show that system profit was optimized when the defective rate followed a triangular distribution under carbon cap-and-trade regulation and when green technology investment helped to enhance retailer profit by 18.12 % , whereas autonomated inspection increased retailer profit by 10.27 % .

Keywords: optimization; carbon emission regulations; green technology; dual channel retailing; investment management (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
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